The New Year is often viewed as a time to reevaluate and set goals. As it rounds the corner, businesses examine their profit and loss margins and determine rates for the coming year. Aviation insurance premiums take into consideration many factors: pilot experience, aircraft loss ratio, rising values, aging aircraft and more. The insurance carrier does not bear the load alone, working with reinsurers to take on part of the aviation risk. For aviation insurance, early 2023 is bringing updated reinsurance agreements and changing rates.
2019 marked a significant increase in insurance rates due to the hardening market after over a decade of low rates due to all the industry competition. In addition to rate hikes, stricter underwriting guidelines were imposed in many areas. While 2022 showed signs of rate increases starting to plateau, the effects from the Boeing 737 Maxx losses estimated at $3 billion are starting to trickle down into the general aviation segment. In addition, aircraft confiscated in Russia due to war sanctions could cost the industry an estimate of $11 billion only adds to the reinsurer burden.
Not only aviation losses cause insurance rates to increase. Natural disasters like hurricanes, floods, and fires all contribute to the reinsurance rates. Inflation has also become a current factor, affecting parts and labor costs for claims. As a result of increased reinsurance rates, we expect aviation premiums to climb another 15-25% as their treaties are renegotiated.
While the increased rates are the ‘new normal’ compared to just over a decade ago, being proactive can minimize the impact. Be prepared and start early! Upon request, gather all the required information for renewal and return it promptly to your insurance agent. Often, complex policies cannot be quoted through a simple algorithm and may require a stream of communication between the underwriter and agent prior to formalizing a quote.
While rates are increasing across the board, there is still competition amongst the aviation insurance carriers. Working with an agency such as Aviation Insurance Resources (AIR) who is appointed by all the major aviation insurance markets will provide access to all the quotes available on your aviation risk. All the agents at AIR are pilots and specialize solely in aviation related policies. To learn more about your upcoming aviation insurance renewal or purchase call us at 301-682-6200 or request an insurance quote online today!